Country Report: MOROCCO 

I. GENERAL DATA

Morocco officially known as the Kingdom of Morocco, is a sovereign country located in the Maghreb region of North Africa.
Geographically, Morocco is characterized by a rugged mountainous interior, large tracts of desert, and a lengthy coastline along the Atlantic Ocean and Mediterranean Sea.
Morocco has a population of over 33.8 million and an area of 446,550 km² (172,410 sq mi). 
Its capital is Rabat, and the largest city is Casablanca. 
Islam is the predominant religion and the official languages are Arabic and Tamazight.

Morocco is a member of the Arab League, the Union for the Mediterranean, and the African Union. It has the fifth largest economy of Africa.
The country’s economy is considered a relatively liberal economy governed by the law of supply and demand. 
Since 1993, the country has followed a policy of privatisation of certain economic sectors which used to be in the hands of the government. Morocco has become a major player in the African economic affairs and is the 5th African economy by GDP (PPP). Morocco was ranked the 1st African country by the Economist Intelligence Unit’ quality-of-life index, ahead of South Africa. 
However, Morocco has since then slipped into fourth place behind Egypt, but ahead of Angola. 
The services sector accounts for just over half of GDP and industry, made up of mining, construction and manufacturing, is an additional quarter. 
The industries that recorded the highest growth are tourism, telecoms, information technology, and textile.

II. FOREIGN INVESTMENT

In addition to the tax exemptions granted under the common law, Moroccan law provides specific financial, tax and customs advantages to investors, as part of agreements or investment contracts to be concluded with the State, provided that they meet the required criteria. 

This concerns:

• The contribution of the state to certain investment expenses: Investment Promotion Fund;
• The contribution of the state to certain expenses for the promotion of investment in specific industrial sectors and the development of modern technologies: the Hassan II Fund for Economic and Social Development;
• Exemption from customs duties under Article 7.I of the Finance Act No. 12/98;
• Exemption from import VAT under Section 123-22 °-b of the General Tax Code.

1. INDUSTRIAL ACCELERATION PLAN

The Industrial acceleration plan is a new approach based on the implementation of efficient ecosystems aiming at the integration of the value chains and the consolidation of the local relations between big firms and SMEs .
The strategy, that will extend over the 2014-2020 period, is expected to generate half a million jobs in the sector and substantially increase the share of industry in GDP from the current 14% to 23 %.
The changes to be introduced will help diversify and expand the industrial fabric and institute a better coordination and deeper partnership between large companies and SMEs.
It will therefore reinforce the Moroccan Industry as a major leverage for growth and job creation.
The new strategy provides for the creation of the “FDI”, a public industrial investment fund endowed with 2 billion euros.
It also focuses on supporting the transition of the informal sector to the formal economy with a series of incentives and tax measures.
Also, the plan grants utmost importance to human resources, the aim being to respond better to Moroccan and foreign enterprises’ requirements.
The plan provides for other measures to better exploit and optimises industrial zones and makes them more accessible to operators through rental offers.
On the other hand, the strategy calls on all Moroccan economic operators to have “the Africa reflex” to upgrade Morocco’s partnership with African countries in order to confirm the position of Morocco as a gateway for international investment in the continent.

2. WIND ENERGY

As part of its strategy towards energy use, Morocco has undertaken a vast wind energy program, to support the development of renewable energy and energy efficiency in the country. The Moroccan Integrated Wind Energy Project, spanning over a period of 10 years with a total investment estimated at 31.5 billion dirhams, will enable the country to bring the installed capacity, from wind energy, from 280 MW in 2010 to 2000 MW in 2020.
The development of 1720 MW of new wind energy farms are planned as follow:

• 720 MW under development in Tarfaya (300 MW), Akhfenir (200 MW), Bab El Oued-Laayoune (50 MW), Haouma (50 MW) and Jbel Khalladi (120 MW)
• 1000 MW planned in 5 new sites chosen for their great potential: Tanger2 (150 MW), El BaidaKoudia in Tetouan (300 MW), Taza (150 MW), Tiskrad Laayoune (300 MW) and Boujdour (100 MW).

Objectives of the wind energy program are:

• Increase the share of wind power in the national energy balance to 14% by 2020
• Achieve a production capacity from wind power of 2 GW and annual production capacity of 6600 GWh, corresponding to 26% of current electricity generation
• Save annually 1.5 million tons of fuel, matching the sum of 750 million U.S. dollars, and prevent the emission of 5.6 million tonnes of CO2 per year.

3. TOURISM

Sectoral incentives:

• Exemption of import duty preference for all capital equipment needed for the promotion and development of the project
• VAT exemption for capital goods, machinery and equipment acquired in Moroccofor a period of twenty four (24) months from the date of commencement of business of the company
• Exemption from import VAT for a period of thirty six (36) months for capital goods, machinery and equipment acquired on importation.
• Total relief of the SI of turnover in foreign exchange business and hotel for a period of5 years from the year in which the first accommodation was made in foreign currencies and a reduction of 17.5% over this period.
• Total exemption from IR to the amount of turnover in foreign currency by the hotel companies and for a period of 5 years and a reduction of 50% over this period.

4. CONVENTIONAL TERMS

For investments that meet a number of criteria, the investor may conclude with the State, investment agreements granting implementation aid for the project (for details, see the Factsheet Investment Incentives).

5. FINANCING OFFERS

To remove the constraints on the access to financial resources, Vision 2020 considers the establishment of an instrument for national and international investment mobilization: the Moroccan Fund for Tourism Development (FMDT).
Investment premiums will be implemented taking into account the level of risk perceived by investors for each type of product and for each destination.
To strengthen its commitment in supporting the implementation of Vision 2020, the banking sector is willing to mobilize a budget of 24 billion DH.
Aside from commercial banks responsible for financing the sector, funds for national investments were created to support the dynamic development of tourist projects. Some of them are Actif Invest, Madaef, H Partners, capital T and Saham.

 6. FISHING SECTOR

The fishing sector in Morocco has developed an integrated, ambitious and comprehensive development in 2020 called “Halieutis.
It aims at upgrading and modernization of various sectors of the fishing industry and improve its competitiveness and performance.
The grand strategy of sector development meansbuild the sector into a genuine development opportunity in the Kingdom, and is basedon three main axes declined as projects: Sustainable use of resources and promotionof responsible fishing involving Fishermen also considered as major players in sector development The development of an efficient and quality fishing Strengthening Competitiveness.

7. AGRICULTURE

Green Morocco Plan designed to promote the development of the entire agricultural and territorial potential. The new Moroccan agricultural sector is meant to be open to all using different strategies depending on the targeted issues.

• Green Morocco Plan will contribute to GDP with 174 billion dirhams, creating 1.15 million jobs by 2020 and triple the income of nearly 3 million people in rural areas.
• Green Morocco Plan focuses on two pillars.
• The accelerated development of a modern and competitive agriculture, vital for the national economy, through the realization of a thousand new projects with high added value in both productions and agro-food.
• Support to smallholder agriculture through the implementation or professionalization of 545 projects of small farms in difficult rural areas, thereby promoting greater productivity, greater recovery of production and sustainability of farm income . This second pillar also seeks the conversion of cereal crops with higher value added (or less sensitive to precipitation) and processing of local products.
• To strengthen the projects of these two pillars, the VMS is based on projects consisting of the so-called cross-sector framework redesign and improvement of water policies, land tenure and the This plan revolves around the concept of aggregation for overcoming constraints to the fragmentation of land ownership patterns, while providing access to aggregated holdings of modern production techniques, finance and markets. It is based on the implementation of a new wave of investment around new players with high managerial ability.
• The regional declination of the Green Morocco Plan in farm aims to build a regional vision and a regionalized agricultural production, eco-balance between two pillars and to mobilize regional and national funds, credit agencies, and investors as well as other donors wishing to support Morocco in the implementation of this Plan.

8. TAXATION IN MOROCCO

The Moroccan tax system, for the sake of simplification, rationalization and modernization, has been codified under the General Tax Code (CGI).

The main taxes are:

• Income Tax concerning income and profits of individuals and private companies,
• Corporate Tax concerning income and profits earned by companies and other legal entities,
• Value added tax (VAT), which applies to consumer spending,
• Registration fees and stamp duties.Moreover, in order to encourage investment and promote certain sectors, the existing legislative provisions relating to tax incentives envisage tax exemptions in terms of common law and at the sectoral level.

9. INCOME TAX

The Income Tax (IT) applies to income and profits of natural persons and legal entities that have not opted for Corporate Tax.

The concerned incomes are:

• Wage income;
• Professional income;
• Land income and profits;
• Income from movable capital and profits;
• The agricultural income.

10. IT RATE

Starting from January 1, 2010, the scale for calculating the IT is between 0% and 38%.
Besides, specific rates and partial or total exoneration apply for certain products and payments.

11. CORPORATE TAX

The Corporate tax applies mandatorily to income and profits of capital companies, public institutions and other corporations that carry out lucrative transactions and on an irrevocable basis to partnerships.

12. PROPORTIONAL RATE

Net profit

(in MAD) Rate

• Less than or equal to 300,000 10%
• From 300,001 to 1,000,000 20%
• From 1,000,001 to 5,000,000 30%
• More than 5,000,000 31%
  37 %: Rate fixed for credit establishments, Bank Al Maghrib, The CDG (Caisse de Depot et de Gestion), insurance and reinsurance companies and leasing companies.

13. SPECIFIC RATE

Specific rates and partial or total exemptions are anticipated for certain products and remunerations. Please consult the corporate tax factsheet for more information.
Source: Code Général des Impôts.

14. VALUE ADDED TAX

VAT applies to industrial, craft, commercial and liberal activities, as well as import operations.
Retailers’ income is also taxable when their turnover accomplished during the year exceeds or equals 2,000,000 DH.

15. VAT RATES

There are three rates:

• A standard rate of 20%,
• Reduced rates of 7% for certain consumer products,
• 10% on certain food products, beverages and hostelry industry in particular and 14% for other products.

Specific rates and partial or total exonerations apply for certain products and payments.